For the last 30 years, private citizens in this southeastern China metropolis have largely taken over one of the least questioned prerogatives of governments the world over: infrastructure.
Driving down the cluttered and half-constructed streets of this 3-million-strong boomtown requires frequent U-turns and the patience of Buddha, but every road eventually leads back to a factory. Each factory is in turn surrounded by a maze of roads filled with hundreds of small feeder shops selling spare parts, building materials, and scraps. Every haphazard street in this town seems to have an economic purpose….
The official channels of financing and investment are routinely bypassed, replaced by local institutions with their own governance and lending rules. It all works, if a bit haphazardly:
Gray-market lenders are often established, though technically illegal, financial institutions that lend primarily working-capital loans at rates as high as 10 percent a month. Contacts often modify interest rates based on how well you know them. Forms of repayment enforcement differ. Weng points out that in a community so dependent on guanxi—relationships—defaulting on a contact’s loan could blackball you from future business opportunities….
Lending also takes place through a number of formal lending institutions that have become informal depositing institutions. Pawnshops in Wenzhou are very different from those in the West. The shops can give out loans of millions of dollars backed by property and stocks, and they can pay depositors interest rates three to four percentage points higher than the official lending rate at banks.
It’s a vivid example of what can be achieved when the central planners are too far away to have much influence and local bureaucrats learn to simply get out of the way. If only U. S. bureaucracy was so ineffective!
A Chinese libertarian, Nicolas Dong, who recently did a Mandarin translation of one of my IP articles, recently told me this in an email regarding my earlier post, Don’t Bet on China:
I agree most part of your point of view about China. I believe that after the bust of the current housing bubble and high inflation, there will be much more unrest. The costs to maintain a “stable” social order have exceeded the cost of maintaining the army. Great changes may occur after the Xi Jinpin administration. But democratization will probably make China more socialist, for reasons explained in Hoppe’s Democracy: The God that Failed. There are just too many mobs here. And many social democrats are controlling the media, preaching democracy and equality instead of liberty. Fortunately, some influential media have libertarian-leaning editors or columnists. We also have libertarian and classical liberal university professors. We are trying our best to have a greater influence.
Also, regarding the libertarian perspective on intellectual property and my anti-IP article that he translated, he said:
They [the Chinese libertarians] debated for a while, and now, most libertarians in China are anti-IP.
However its influence is limited since we are just circulating it in our circle, and posting it on websites. Most people in China don’t know what libertarianism is, and they may not capable of catching the idea in the article.
… You know, something nice is that those who control the internet here don’t know what libertarianism and the Austrian School are; thus, most of those sites are not prohibited. The Austrian School does have some influence in academia here, albeit mainly Hayekian.
Another example, in a long line of abuses, of how “the law” is really only to be exalted so long as it serves the purposes of the government. When the state finds itself losing the legal battle, it can always find or invent new uses for laws to get around such pesky impediments. In this case, the homeowner won court battles to protect his home, but the city simply called his property a “blight,” and not only demolished his home, but will likely send him a bill for it. The most immediate parallel which comes to mind is China’s policy of executing people, and billing the family for the bullet.
Interesting how the talking head can say that there are two sides to this story and avoid laughing. There are two sides to this story in the same way that there are two sides to an armed robbery.
A couple of days ago David mentioned that the Mises Institute providing its entire online media and literature library as a set of free torrents can be seen as part of a distributed or grassroots intellectual guerrilla resistance against the state. This is just one aspect of the Mises Institute’s effort to be completely open [...]
Recommended podcasts: Matt Ridley on The Rational Optimist & “Ideas Having Sex,” Reason.tv (June 16, 2010): “Best-selling science writer Matt Ridley’s latest book is The Rational Optimist, which explains why the author is upbeat on the prospects of a planet and a civilization that seems to lurch from one pending political, economic, or environmental catastrophe [...]
China is widely viewed as a “threat” to the US because of its perceived rapid and unstoppable economic growth. This is, in my view, doubly confused. First: if the premise were true, this would be good, not bad. Second: I don’t think China is in such great shape. Unfortunately. Some free market economists think otherwise. [...]
The official channels of financing and investment are routinely bypassed, replaced by local institutions with their own governance and lending rules. It all works, if a bit haphazardly:
